Ramachandran, R. and Rauh, C.
Discrimination Without Taste - How Discrimination can Spillover and Persist
WP Number: 1417
Abstract: We introduce coordination failures driven by beliefs regarding the presence of taste discriminators as a
channel of discrimination in activities requiring the input of more than one individual for production to
occur. We show discrimination can persist forever under perfectly observable ability, when taste for
discrimination has died out, and under absence of discriminatory social norms. Empirically, we analyze
the market for self-employment in the US, a market requiring input from multiple sources. Consistent
with the theoretical prediction, we find beliefs about discrimination to be a significant negative correlate
of self-employment rates of blacks in the US.
Keywords: Discrimination, Coordination Failure, Beliefs
JEL Codes: C73 D83 J71
Author links: Christopher Rauh
PDF: wp1417.pdf 
Open Access Link: 10.17863/CAM.5828
